The software in NSDL has been modified to handle distribution of bonus entitlements through Automatic Corporate Action (ACA) Module. This works as follows :

The holdings as of the record date / book closure, (including those holdings which are pledged) are considered for computing bonus entitlements.

At the time of effecting the credit of bonus shares, the system checks whether pledge is still open or closed.

Where pledge orders are not closed / invoked or partially closed / invoked, the bonus entitlements in such cases are credited to the pledgor’s account with pledge marked in favor of the pledge.

If the pledge is closed/invoked fully, the bonus entitlements will be credited to the pledgor’s account as free balances.